Russell Cohen

The Lease- Buyers And Sellers Beware!

The Lease- Buyers And Sellers Beware!

May 2015

The lease is an important issue and, in many cases, a major issue.Whether you are buying or selling a business, it’s important to understandthat, if the real estate is not included, the lease is a critical lementof the sale process.

There are three ways the transfer of the lease can be handled:

A new lease- A new lease can be entered into buy the lessor and thebuyer.

A sub-lease- This can be negotiated between the seller and thebuyer. In a sub-lease, the seller of the business becomes the landlord.The exsisting landlordmust always approve the sublease.

The Assignment of the Lease- This is the most common method oftransferring the lease. The seller simply assigns the existing leaseto the buyer. The buyer assumes responsibility fot the lease, and inmost cases, the landlord must approve the assignment. Sellers shouldbe aware that, in most cases, they are still responsible for the termsof the lease.

Sellers should take a look at the lease on their business and ask themselvesthe following questions:

Is the lease long enough and the rent low enough to make the businessattractive to a potential buyer?

Is the rent consistent with similar businesses in the area?

Are there any terms or conditions of the lease that might be unfavorablein the eyes of a potential buyer?

Are you on good terms with the landlord- and can the lease betransferred without any hitches?

Your business broker is a good source to review the lease and its termsfrom a business sale perspective.

(This information was taken from the Today’s Business Scene newslettercopyright 2001 Business Brokerage Press)